As the Samsung Electronics labor union declared it would launch a general strike, labor and management failed to resolve their differences over the "bonus allocation method for loss-making divisions."
Samsung Electronics labor and management on the 20th halted their second post-mediation talks at the National Labor Relations Commission (NLRC) at the Government Sejong Complex. Although they held a marathon meeting, repeatedly adjourning and reconvening since the morning of the 19th, they ultimately declared a breakdown. The Samsung Electronics local of the Samsung Group supra-enterprise labor union (supra-enterprise union), which holds a majority, and the No. 2 union, the National Samsung Electronics Labor Union (Jeonsamno), formed a joint struggle headquarters and have announced they will launch an 18-day general strike starting on the 21st, so this second post-mediation was seen as effectively the last card that could prevent a strike.
The bargaining party, the supra-enterprise union, said after the post-mediation ended that it would "legally proceed with a general strike as scheduled." Samsung Electronics said, "If we accept the union's excessive demands as they are, the company's basic management principles could be shaken."
It is known that in this post-mediation the two sides reached significant convergence on major frameworks, such as maintaining the cap on the outperformance incentive (OPI) and institutionalizing special bonuses, which had been sharply contested. However, the deal collapsed as they clashed at the last minute over the core issue of the allocation ratio of the funds.
The two sides failed to reach agreement to the end on the specific allocation ratio of the bonus pool. The union reportedly demanded a method that allocates 70% of the total bonus pool commonly across all divisions, with the remaining 30% paid differentially by division performance, such as memory, foundry, system LSI, and smartphones.
The aim is to ensure that employees in the loss-making system LSI and foundry divisions can receive a certain level of bonuses. Many members of the supra-enterprise union are affiliated with loss-making divisions, a point cited as the background to this demand.
By contrast, management held firm, arguing to lower the proportion of the common division pool to around 40% and raise the division-specific differential payment proportion to as much as 60%. The position is that if the gap between divisions that produced results and those in the red is narrowed excessively, Samsung Electronics' distinctive performance-based principle and merit-based discipline could be undermined. Management's view is that maintaining a compensation system that gives unsparing evaluations to underperforming divisions and clear rewards to those that deliver results can prevent the perception that "you get bonuses even if you post a loss" and secure medium- to long-term global competitiveness.
This post-mediation collapsed as management did not agree to the NLRC's mediation proposal. The NLRC, which mediated between Samsung Electronics labor and management, said in a press note, "The NLRC presented a mediation proposal to labor and management," adding, "Labor accepted, and management said it was reserving its acceptance and did not sign, so the second post-mediation failed to be established."
In a statement, Samsung Electronics said the reason a deal could not be reached until the very end of the post-mediation was that "although the company accepted most of the size and content of the bonuses, the union did not back down from its demand to grant a level of compensation to loss-making divisions that would be difficult to accept socially." It added, "(The union's demand) directly violates the company's basic management principle that 'where there are results, there is reward,'" and, "We judged that if we abandon this principle, it could negatively affect not only our company but also other corporations and industries."
Industry watchers say the conflict stems not from simple numerical fine-tuning but from a clash of structural interests inside the company. Among employees in the memory division, which is generating large profits, complaints and controversy over reverse discrimination are intensifying over the organization's performance being used as funding to support loss-making divisions. From Samsung Electronics' perspective as well, if the system is revised to meet the union's demands, the compensation structure would be leveled downward, and they cannot help but consider the risk that talent outflows to competitors such as SK hynix or overseas semiconductor companies could accelerate. The union, on the other hand, risks weakening its representativeness and rationale for a strike if it does not advocate companywide compensation. An industry official said, "In terms of institutionalizing and making bonuses more transparent, which the union has been arguing for, a middle ground was found, but in the end they failed to resolve the issue of the detailed distribution of compensation."
The Samsung Electronics union, however, said, "We will not stop efforts to reach a deal even during the strike," leaving the door to talks open. Samsung Electronics also said, "We will continue efforts to resolve the issue until the end, through additional mediation or direct talks with the union," adding, "Under no circumstances should there be a strike, and we will not give up dialogue until the last moment to prevent the worst-case scenario."